Overview
747.This Schedule, introduced by section 365, rewrites the income tax and capital gains tax provisions in Chapter 5 of Part 2 of FA 2005 dealing with alternative finance arrangements. These provisions tax and relieve alternative finance return under certain types of financial arrangement in the same way as interest. This includes financial arrangements that comply with Shari’a law, which prohibits transactions that involve interest. The rules are not limited to Shari’a compliant products but also apply to any finance arrangement that falls within their terms.
748.The overall approach is in line with that used for the corresponding corporation tax provisions in Chapter 6 of Part 6 of CTA 2009. As far as possible the provisions have been kept together so that users can see the overall scheme of the legislation. Signposts have been inserted into appropriate places in other parts of the tax code that are affected by these provisions.
749.The regulatory power in section 98 of FA 2006, rewritten for corporation tax in section 521 of CTA 2009, has proved difficult to rewrite separately in a way that ensures that it continues to operate satisfactorily and in an unchanged way. This Act therefore rewrites the regulatory power as section 366 of this Act and repeals section 521 of CTA 2009.
750.Part 1 of the Schedule inserts a new Part 10A into ITA to deal with the income tax aspects of the legislation. Part 2 of the Schedule inserts a new Chapter 4 into Part 4 of TCGA to deal with the capital gains tax aspects.
751.Part 3 of the Schedule makes a number of amendments to other enactments, including inserting new sections in Chapter 7 of Part 7 of ITA dealing with the interaction between alternative finance arrangements and Community Investment Tax Relief.
